Edano seeks to end regional monopolies of power utilities

Government wants to spin off distribution

Japan will look at other countries as it studies the idea of spinning off power distribution from the business of electricity generation, a move that would put an end to power companies’ regional monopolies, Chief Cabinet Secretary Yukio Edano said Thursday.

“The government has a large responsibility in securing a steady supply of electricity,” Edano said.

“But looking at other countries, there are various forms, and I think that we will move forward with discussions while referring to examples including from abroad,” he said.

Several industrialized countries use two-tiered systems, but the 10 power companies in Japan each command a region unto themselves.

On Wednesday evening, Prime Minister Naoto Kan said he intended to put an end to that.

“There was a similar argument over the telecommunications business, but now the industry has taken a new form without regional monopolies,” Kan said. “And I believe that we will reach a stage where we will hold such discussions” on the power industry.

The idea surfaced amid the need to review energy policy as the government and Tokyo Electric Power Co. continue to deal with the crisis at the Fukushima No. 1 nuclear power plant.

The idea is likely to meet strong opposition from utilities, which argue that such a divide would “affect the steady supply of electricity.”

On the other hand, if newcomers were allowed to enter the market on the distribution side, it could lead to drop in electricity prices.

The prime minister also stressed that the administration will conduct “a fundamental review” of nuclear power policy, including the possibility of splitting the Nuclear and Industrial Safety Agency from the Ministry of Economy, Trade and Industry.

METI presumably oversees the nuclear power plants and promotes atomic power, while NISA is supposed to act as a nuclear watchdog.

“There is the problem of independence — monitoring and the promotion of nuclear policy have coexisted under the same ministry,” Kan said. “I believe that how nuclear power has been administered over the years should be fundamentally reviewed.”